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Obama Calls for Overhaul of Financial Sector

U.S. President Barack Obama says it is
time to overhaul the rules governing the nation’s financial
sector. The Obama administration says that while it wants tighter
regulations, it has no plans to nationalize banks.

One day after a speech to the nation on
his economic plan, President Obama weighed in on the need to set
new rules for America’s ailing financial sector.

“We now know from painful experience that
we can no longer sustain 21st century markets with 20th century
regulations,” said President Obama.

The president spoke after meeting with his
top economic advisors and leading members of the two Congressional
financial committees.

Mr. Obama said the process of drafting the
necessary legislation to put tougher financial regulations in place
starts now. He said the aim is clear.

“Strong financial markets require clear
rules of the road – not to hinder financial institutions, but to
protect consumers and investors and ultimately to keep those
financial institutions strong,” he said.

He said new regulations must promote
openness and transparency. He said they must be comprehensive and
promote accountability.

Congressional leaders say there is no hard
timetable for completing the legislation, insisting that it is more
important to do the job right than to do it fast.

But President Obama makes clear he would
like to have a regulation plan in hand when he goes to London for
the April 2 summit of the world’s leading developed and emerging
economies.

“As we work to set high regulatory
standards here in the United States, we have to challenge other
countries around the world to do the same,” he said.

The president acknowledged that drafting
the necessary legislation will be difficult. But he predicted that
Democrats and Republicans will be able to come together on this
issue.

Representative Spencer Baucus, the top
Republican on the House of Financial Services Committee,
agrees.

“This is too important to fail,” he said.
“And it is too important for partisanship.”

The White House push for financial
services reform comes amidst worries that the administration might
go further and nationalize troubled banks.

But in congressional testimony on
Wednesday, central bank chairman Ben Bernanke played down the
possibility of a government takeover.

“A nationalization to my mind is when the
government seizes the bank, zeros out the shareholders and begins
to manage and run the bank,” he said. “And we don’t plan anything
like that.”

At the same time, the Treasury Department
announced that the nation’s biggest banks would be granted
immediate access to more of the federal government’s $700 billion
financial rescue fund.